Seybold Report ISSN: 1533-9211
Dr. Janki Mistry
Asst. Professor, Department of Business and Industrial Management, Veer Narmad South Gujarat University, Surat, Gujarat, India
Vol 17, No 09 ( 2022 ) | DOI: 10.5281/zenodo.7079509 | Licensing: CC 4.0 | Pg no: 1009-1020 | Published on: 14-09-2022
Abstract
The study is an attempt to study announcement period returns of bonus share issues of Indian companies between the years 2017 and 2021. Bonus shares are a form of stock dividends to existing shareholders of the company. Many studies have shown that dividends of any type usually cause excitement in the stock market and could lead to abnormal returns for the shareholders. The event study methodology using the market and risk-adjusted model was used to study whether the announcement of bonus shares by companies listed on the A group on the BSE lead to abnormal returns. Returns were also tested for statistical significance using the t-statistic. It was found that for the selected sample companies, bonus announcements did lead to abnormal positive returns immediately after the announcement day, but these returns were not statistically significant. However, abnormal negative returns were observed for two days before the announcement of the issue which could indicate information leakage or insider trading.
Keywords:
Bonus shares, event studies, dividends, announcement period returns, market, and risk-adjusted model